E4.4 bln in taxes UNCOLLECTED!

By Delisa Magagula

The Eswatini Revenue Service (ERS) has uncovered a tax gap of more than E4.4 billion that should have been paid to government coffers but was not declared or collected.

The revelation came as Finance Minister Neal Rijkenberg launched the 2025 Income Tax Filing Season and the Compliance Improvement Plan (CIP) at the ERS headquarters in Ezulwini on Wednesday.

Rijkenberg said the findings of a recent tax-gap analysis painted a worrying picture of low compliance and under-declaration across major sectors of the economy.

“The analysis revealed an estimated E4.4 billion in taxes that were due but not declared or paid. This figure represents potential revenue that could have been channelled towards national priorities such as healthcare, education and infrastructure,” said the Minister.

The Minister said, according to the report, Value Added Tax (VAT) accounted for the largest share of unpaid revenue, amounting to E1.3 billion.

Rijkenberg mentioned that the wholesale and retail sector was found to be the biggest offender, contributing roughly E600 million to the total gap. It was followed by manufacturing, with E305 million, and construction, with E127 million in unremitted taxes.

The minister said the figures underscore the persistent challenge of tax evasion and under-reporting, despite progress in improving tax systems over the past decade.

“Some businesses continue to operate informally or under-declare their income, which creates unfair competition for compliant taxpayers and deprives the government of vital revenue,” he said.

In response, the ERS has developed the Compliance Improvement Plan (CIP), a new framework aimed at closing compliance gaps, improving taxpayer behaviour, and modernising revenue administration.

The plan focuses on data-driven audits, risk-based enforcement, and partnerships with industries to promote voluntary compliance.

ERS Commissioner General Brightwell Nkambule said the plan is designed to strengthen transparency and fairness in tax collection.

“The CIP will enhance our ability to detect non-compliance early through data matching, digital tracking, and taxpayer segmentation. It also recognises that enforcement alone cannot solve the problem; we must encourage a culture of voluntary compliance,” said Nkambule.

Nkambule added that the ERS has already begun integrating its systems with digital platforms such as TaxEase and the TaxPal App, which allow individuals and companies to file their returns online, reducing both paperwork and errors.

Launching the 2025 filing season under the theme ‘Doing Your Part Matters,’ Rijkenberg urged all taxpayers individuals and corporations alike to meet their filing and payment deadlines.

The deadlines announced were, October 31, 2025, for companies and business associations, and November 30, 2025, for individuals, including company directors, Members of Parliament, and trustees.

The minister reminded taxpayers that exempt organisations such as NGOs, charity bodies, churches, and cooperatives must reapply annually for exemption status and submit their audited financial statements.

Meanwhile, economists have described the E4.4 billion tax gap as a wake-up call for the country. Economic analyst Dr Mandla Dlamini said the shortfall shows how much potential revenue Eswatini is losing every year due to weak enforcement.

“E4.4 billion is roughly 8 to 10 per cent of the national budget. If that money were collected, the government could significantly reduce borrowing and invest more in social programmes,” he said.

He added that while voluntary compliance campaigns are important, the ERS should also tighten audit procedures and strengthen penalties for tax evasion.

“Taxpayers respond to incentives and deterrents. If evasion goes unpunished, compliance will remain low,” Dlamini said.

Meanwhile, Business Eswatini Chief Executive Officer E Nathi Dlamini welcomed the ERS’s push for transparency but cautioned against approaches that could stifle legitimate enterprises.

“We support efforts to close the tax gap, but enforcement must be balanced with business sustainability. Small and medium enterprises, in particular, need more support and education to comply effectively,” he said.

He said many SMEs operate informally due to complex registration requirements and a limited understanding of tax obligations.

“Simplifying compliance and providing digital tools like TaxEase are steps in the right direction,” he added.

Meanwhile, Rijkenberg also announced that the ERS and the Treasury are finalising the rollout of the Integrated Financial Management Information System (IFMIS) by April 2026.

The system will digitise all government procurement and payment processes to curb corruption, prevent leakages, and speed up supplier payments.

“IFMIS will eliminate paperwork and make it almost impossible for invoices to be lost or manipulated. It will also help ensure that every lilangeni due to the state is tracked in real time,” said the Minister.

He acknowledged that implementation may face resistance but insisted that difficult reforms must go ahead for the sake of accountability.

To complement enforcement, the ERS is continuing its Sondzela Sikhulume programme, which allows taxpayers to disclose unpaid obligations voluntarily without facing prosecution, provided they engage in good faith.

“This programme shows we are willing to work with taxpayers, not against them. It is a practical way for those with outstanding issues to regularise their affairs and avoid penalties,” said Rijkenberg.

Meanwhile, Financial governance expert Nolwazi Kunene said the tax gap points to a broader issue of transparency in both the private and public sectors.

“Tax compliance depends on trust. People are more likely to pay tax if they believe it is used efficiently. The government must pair strict enforcement with visible improvements in service delivery,” said Kunene.

She urged the Ministry of Finance to publish annual tax-gap reports and update the public on how recovered funds are spent.

“Accountability should flow both ways taxpayers must pay, and government must deliver,” she said.

Concluding the briefing, Rijkenberg said closing the E4.4 billion tax gap will require cooperation from everyone.

“Compliance is not a burden, it is an investment in the stability and growth of our economy. By doing your part, you ensure that the government can continue to provide the infrastructure and public goods that make it possible for businesses to thrive,” he said.

He added that strengthening compliance will reduce Eswatini’s reliance on external loans and enable the country to fund its own development priorities.

“Together, we can close the compliance gaps, build a stronger revenue base, and create the Eswatini we all aspire to see,” Rijkenberg concluded.